Australia’s Over-55 Population Most Affected by Debt

Let’s dream of retirement for a second; you’ve skipped into your 70s, you keep an abundance of snacks and treats just in case the grandkids come over, and most importantly you’ve broken off your long-term relationship with your career.

On top of that we’re all imagining that our huge mortgage is completely paid off and we own all of our assets outright.

We’re no longer being held back by debt and can put our time towards life goals and niche hobbies. It looks good doesn’t it?

But this dreamy picture may not quite be the case as new research from Debt Rescue has shown.

The average age group for clients seeking assistance from Debt Rescue is 30 to 50-year-olds, yet data from their recent survey found that it was Aussies aged 55-years-old and over who said debt stopped them from achieving their life goals – more so than any other age group.

Data from the Australian Bureau of Statistics shows that debt is likely to be higher for those under 55.

Turns out, there’s an ever-growing number of Australians who will need to take money out of their superannuation fund to get their mortgage paid before retirement, according to a report prepared by economist, Saul Eslake.

The decline in affordable housing means that people of working age are now less likely to buy homes until their thirties (if they do at all), so after factoring in your thirty-year home loan and doing the math – the best-case scenario is having your home loan paid by your sixties.

Another factor is that increasingly, people aged over 65 will live in private rental accommodation and if they’re on a pension this means their housing is costing a higher-than-average portion of their total income.

Mortgage Choice’s‘Diversified’ Survey showed 65% of Australians said they believed they wouldn’t have the funds they need for retirement and 54% say they won’t think about it until after 50.

Mortgage Choice’s CEO, John Flavell told Your Life Choices, “Many don’t realise that 50 is simply too old to start saving and planning for retirement. In reality, people should start their retirement planning much earlier in life.”

According to ASFA (The Association of Superannuation Fund Australia), the lump sum required for retirement is about $640,000 for a couple or $545,000 for a single person.

The increasing and longer-lasting debt isn’t just troubling for the individual, with mortgages not being paid off until retirement and super funds being dug into, there’s likely to be a call-out on the government.

Like Saul Eslake said, “there is a clear link between deteriorating housing affordability and the adequacy of Australia’s current retirement income system.”

If our superannuation funds end up funding mortgages or funding weekly housing costs then they’re being stretched further than intended and this could result in a strong calling for the government to increase the retirement pension.